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Prevention as a Giffen good

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  • Peter, Richard

Abstract

A criterion is provided for prevention to be a Giffen good. Under decreasing absolute risk aversion, prevention can only be Giffen if the loss probability is below an endogenous threshold value. For iso-elastic utility, this is possible but not empirically plausible.

Suggested Citation

  • Peter, Richard, 2021. "Prevention as a Giffen good," Economics Letters, Elsevier, vol. 208(C).
    • Handle: RePEc:eee:ecolet:v:208:y:2021:i:c:s0165176521003293
    DOI: 10.1016/j.econlet.2021.110052
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    Cited by:

    1. Richard Peter, 2024. "The economics of self-protection," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 49(1), pages 6-35, March.

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    More about this item

    Keywords

    Prevention; Self-protection; Giffen good; Risk aversion; Comparative statics;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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